U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                -----------------

                                   FORM 10-QSB

/X/      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 2005



/ /      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                        Commission file number: 001-32134
                                                ---------

                           CIRCLE GROUP HOLDINGS, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified in Its Charter)

                               ILLINOIS 36-4197173
               ------------------------------- ------------------
                (State or Other Jurisdiction of (I.R.S. Employer
               Incorporation or Organization) Identification No.)

                  1011 CAMPUS DRIVE, MUNDELEIN, ILLINOIS 60060
                  --------------------------------------------
                    (Address of Principal Executive Offices)

                                 (847) 549-6002
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

     Check whether the issuer: (1) filed all reports required to be filed by
 Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
 shorter period that the registrant was required to file such reports), and (2)
       has been subject to such filing requirements for the past 90 days.

                                 Yes /X/ No / /

    The registrant has a single class of common stock, par value $.00005 per
    share, of which there are 47,847,348 shares issued and outstanding as of
                               September 30, 2005.

         Transitional Small Business Disclosure Format (Alternative 2):

                                 Yes / / No /X/


<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

     See Consolidated Financial Statements beginning on page F-1.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following discussion is intended to assist in understanding the
financial condition and results of operations of Circle Group Holdings, Inc. You
should read the following discussion along with our financial statements and
related notes included in this Form 10-QSB. The following discussion contains
forward-looking statements that are subject to risks, uncertainties and
assumptions. Our actual results, performance and achievements in 2005 and beyond
may differ materially from those expressed in, or implied by, these forward
looking statements.

OVERVIEW

     We are a pioneer of emerging technology companies. We provide small
business infrastructure, funding and substantial intellectual capital to bring
important and timely life-changing technologies to the marketplace through all
phases of the commercialization process.

       Circle Group Holdings, Inc. was founded in May 1994 under the original
name, Circle Group Entertainment Ltd. and changed its name to Circle Group
Holdings, Inc. in 2002. We had no business operations except for research and
development activities between May 1994 and January 1997. In 2002, we
reorganized our business units into three reportable segments: food product
development, security product development, and e-tailor, and acquired FiberGel
Technologies, Inc., which owns an exclusive license to Z-Trim, an all-natural,
corn and other grain-based fat replacement.

     We have four operating subsidiaries: FiberGel Technologies, Inc.,
thebraveway.com, Inc., operating as The Brave Way Training Systems, On-Line
Bedding Corp., and Z-Amaize Technologies, Inc., and have exclusive worldwide
licenses to the Nutrition Analysis Tool website, Mini-Raman Lidar System, and
ThraxVac technology.

RECENT MATERIAL DEVELOPMENTS

     On August 25, 2004, we commemorated the opening of our new production
facility in Mundelein, Illinois with an official ribbon cutting ceremony. At
full capacity, this eco-compliant facility is capable of producing up to ten
million pounds annually of Z-Trim(TM). In addition, this facility is also
capable of producing annually up to ten million gallons of Z-Bind(TM) adhesive
resin and polymer extenders for use by the plywood, concrete and construction
industries.

On September 22, 2005 FiberGel Technologies a subsidiary of Circle Group
Holdings announced that the food and oil division of a large Japanese trading
company has placed their first order Z-Trim. The order came after six months of
successful testing in meats dressings and baked goods and represents an
increased presence of Z-Trim in the Asian marketplace.

                                       2
<PAGE>
On August 23, 2005, FiberGel Technologies, a subsidiary of Circle Group
Holdings, announced that they had signed an exclusive agreement with a
distributor in Mexico. The distributor works with many of the top food companies
and restaurants in Mexico and will now be offering them an ingredient that will
help lower the fat and calories in their already high fat foods. With the
obesity problem in Mexico growing rapidly, Z-Trim can have a big positive effect
on their diet.

On August 15, 2005 FiberGel Technologies, announced that their zero calorie fat
replacement ingredient, Z-Trim, will be used in salad dressings at a popular
wellness center and health spa. The center has a history of great success with
low calorie and low fat diets along with exercise and Z-Trim will be used to
accomplish their continued success.

On August 8, 2005 Circle Group hosted The CEO Council's second meeting of public
company executives and service providers. The event was sponsored by Infinium
Labs, Inc. a CEO Council Best Practice Leader, and Vintage Filings, Inc., a
premier SEC edgarization service. The meeting was held at Circle Group's
Mundelein, Illinois corporate headquarters and was moderated by Gregory Halpern,
CEO of Circle Group. It included a panel discussion on small issuer regulatory
and legislative reforms, and an interactive question and answer session that
gave attendees an opportunity to share their wants, needs, and concerns related
to their legislative and regulatory needs, so their voices could be heard during
the Advisory Committee's hearings which took place on August 9 and 10. The CEO
Council is a nonprofit organization advocating the interests of small public
companies and their shareholders. Members of the CEO Council include
publicly-traded companies such as: CorpHQ, Inc., Cybertel Capital Corporation,
Circle Group Holdings, Microhelix, Knobias, and Ecuity, Inc., as well as service
providers such as IBA Capital, Investrend Communications, and The August Law
Group.

For discussion of the promissory note for $965,000 received as payment for a
note receivable for a stock purchase, see Note 6 to the Financial Statements.

SUMMARY OF FINANCIAL RESULTS

Total assets decreased to $7,469,285 at September 30, 2005 from $7,957,409 on
December 31, 2004. This was primary the result of the net operating loss,
offsetting against the proceeds received from equity transactions.

Total equity increased to $6,657,450 on September 30, 2005 compared to
$5,833,958 for the year ended December 31, 2004.

RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AS COMPARED TO THE
SAME PERIODS ENDING SEPTEMBER 30, 2004

Revenues

Revenues decreased by $49,576 or 28% to $124,993 for the three months ended
September 30, 2005 from $174,569 for the three months ended September 30, 2004
Revenues decreased by $115,410 or 22% to $404,385 for the nine months ended
September 30, 2005 from $519,795 for the nine months ended September 30, 2004.
The decrease in revenues was primarily due to the decrease in demand of our
e-tailer products as a result of budget cuts in the airline and train
industries, and to the decrease in demand of our business consulting service.
The following table provides a breakdown of the revenues for our divisions for
the periods indicated:

                                      Three months ended September 30,
                                             2005           2004
                                           --------       --------
           Products                        $124,567       $175,045
           Services                             426           (476)
                                           --------       --------
        Total Revenues                     $124,993       $174,569
                                           ========       ========

                                       Nine months ended September 30,
                                             2005           2004
                                           --------       --------
           Products                        $401,251       $489,739
           Services                           3,134         30,056
                                           --------       --------
        Total Revenues                     $404,385       $519,795
                                           ========       ========

                                       3
<PAGE>
Operating expenses

Operating expenses consist of payroll and related costs, insurance, occupancy
expenses, professional fees, and general operating expenses. Total operating
expenses decreased by $17,660 or 2% to $986,865 for the three months ended
September 30, 2005 from $1,004,525 for the three months ended September 30,
2004. Total operating expenses increased by $466,492 or 13% to $3,989,205 for
the nine months ended September 30, 2005 from $3,522,713 for the nine months
ended September 30, 2004. The increase in operating expenses was primarily due
to introduction and promotion of Z-Trim products, and the increase in investor
and public relation expenses.

Other income (expense)

Total other income for the three months ended September 30, 2005 was $4,526,
compared to $964,729 for the comparable period in fiscal 2004. Total other
income for the nine months ended September 30, 2005 was a deficit of $941,832,
compared to $993,841 for the comparable period in fiscal 2004. The decrease in
other income was primarily due to a provision of an uncollectible note
receivable of $965,000 and the decrease in rental income. Other income for nine
months ended September 30, 2004 included a settlement of $950,000 received from
a former attorney.

Net loss

The Company reported net loss for the third quarter of 2005 of $1,005,021 or
$0.02 per share, a 188% decrease from the net income of $56,827 or $0.00 per
share for the third quarter of 2004. For the nine months ending September 30,
2005, the Company reported a net loss of $4,969,891 or $0.11 per share or a 96%
increase from a net loss of $2,529,285 or $0.07 per share for the nine month
period ending September 30, 2004. This was due to a combination of the decrease
in revenues, the introduction and promotion of Z-Trim products, the increase in
investor and public relation expenses, and a provision of an uncollectible note
receivable.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2005, we had cash and cash equivalents of $26,953, a decrease
of $66,795 from December 31, 2004 primarily due to cash consumed in operations
of $3,247,754 and purchase of property and equipment of $157,891 offsetting by
proceeds received from equity transactions of $3,338,850. Our total capital
lease obligations were $53,201 at September 30, 2005.

                                       4
<PAGE>
Net cash used by operating activities increased by $2,779,604 or 593% to
$3,247,754 for the nine months ended September 30, 2005 as compared to $468,150
for the nine months ended September 30, 2004. The increase resulted primarily
from our net loss of $4,969,891, adjusted for non-cash items including
depreciation and amortization of $492,049, provision for loan loss of $965,000,
and non-cash services of $1,257,234, and for the decrease from the change in
liabilities over assets of approximately of $919,158.

Net cash used by investing activities was $157,891 for the nine months ended
September 30, 2005, as compared to net cash used by investing activities of
$5,249,104 for the nine months ended September 30, 2004. The decrease was due to
lesser additions of property and equipment for our manufacturing plant in
current year.

Net cash provided by financing activities was $3,338,850 for the nine months
ended September 30, 2005, as compared to $4,936,277 for the nine months ended
September 30, 2004. Net cash provided by financing activities for the nine
months ended September 30, 2005 was primarily from the proceeds received from
notes receivable for stock subscriptions of $2,350,000 and from sale of our
stocks and exercising of options and warrants of $1,009,567. Net cash provided
by financing activities for the nine months ended September 30, 2004 was
primarily from sale of our stocks and from exercising of options and warrants of
$4,954,839.

To successfully grow the individual segments of the business, the Company must
improve its cash position, and the revenue base of each segment, as well as
continue to succeed in its ability to raise additional capital through a
combination of public or private equity offerings, or strategic alliances. The
Company also depends on certain important employees, and the loss of any of
those employees may harm the Company's business.

GOING CONCERN QUALIFICATION

The report of our independent auditors accompanying our consolidated financial
statements for the year ended December 31, 2004 and the notes to our interim
unaudited consolidated financial statements for nine months ended September 30,
2005, discuss issues which raise substantial doubt about our ability to continue
as a "going concern." The going concern qualification is attributable to the
Company's historical operating losses and the amount of capital which the
Company projects it needs to satisfy existing liabilities and achieve profitable
operations. In positive steps, the Company has closed down its loss generating
businesses, and continues to evaluate and implement cost cutting measures at
every entity level. For the nine months ended September 30, 2005, the Company
continued to experience a negative cash flow from consolidated operations, and
projects that it will need certain additional capital to enable it to continue
operations at its current level beyond the near term. The Company believes that
certain of this needed capital will result from the successful collection of its
accounts receivable balances as the manufacturing plant is fully operating
during the coming fiscal year. The Company believes it can raise additional
funds through private placements of its common stock.

                                       5
<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS

The following risks are material risks that we face. If any of the following
risks occur, the business of the Company and its operating results could be
seriously harmed.

WE HAVE A HISTORY OF OPERATING LOSSES AND CANNOT GUARANTEE PROFITABLE OPERATIONS
IN THE FUTURE. ANY FAILURE ON OUR PART TO ACHIEVE PROFITABILITY MAY CAUSE US TO
REDUCE OR EVENTUALLY CEASE OPERATIONS.

We reported a net loss of $1,005,021 for the three months ending September 30,
2005 and a net loss of $4,969,891 for the nine months ending September 30, 2005.
At September 30, 2005 and 2004, respectively, we reported accumulated deficits
of $31,997,721 and $25,439,340. If we continue to incur significant losses our
cash reserves may be depleted earlier than currently anticipated, and we may be
required to limit our future growth objectives to levels corresponding with our
then available cash reserves.

OUR SUCCESS IS DEPENDENT ON MARKET ACCEPTANCE OF OUR PRODUCT.

We have not conducted, nor have others made available to us, results of market
research indicating how much market demand exists for Z-Trim, our fat
replacement product. We are relying on the current concerns over obesity,
weight-health issues, and the rising cost of health care to drive demand for
Z-Trim in the marketplace. We cannot assure you that we will be able to gain the
market acceptance necessary to achieve profitability.

WE MAKE NO PROJECTIONS REGARDING THE VIABILITY OF OUR FAT REPLACEMENT PRODUCT
AND WE CANNOT ASSURE YOU THAT WE WILL ACHIEVE THE RESULTS DESCRIBED.

We make no projection with respect to our future income, assets or business. No
expert has reviewed our business plan for accuracy or reasonableness. Our
business and results of operations will be materially harmed if Z-Trim is not
widely accepted as a fat substitute. It is likely that our actual business and
results of operations will differ from those presented herein.

WE MAY NEED ADDITIONAL FUNDING AND SUCH FUNDING MAY NOT BE AVAILABLE. IF SUCH
FUNDING IS AVAILABLE, IT MAY NOT BE OFFERED ON SATISFACTORY TERMS.

We may require additional financing to fund ongoing operations if our sales and
revenue growth are insufficient to meet our operating costs. Our inability to
obtain necessary capital or financing to fund these needs will adversely affect
our ability to fund operations and continue as a going concern. Our inability to
obtain necessary capital or financing to fund these needs could adversely affect
our business, results of operations and financial condition. Additional
financing may not be available when needed or may not be available on terms
acceptable to us. If adequate funds are not available, we may be required to
delay, scale back or eliminate one or more of our business segments, which may
affect our overall business, results of operations and financial condition.

THE LOSS OF SERVICE OF KEY MANAGEMENT COULD HAVE A NEGATIVE IMPACT ON OUR
PERFORMANCE.

Our success depends to a significant degree upon the performance of our founder
and chief executive officer, Gregory J. Halpern. The loss of his services could
have a material adverse effect on our operating performance, prospects and
viability as a going concern.

                                       6
<PAGE>
OUR MANAGEMENT CURRENTLY BENEFICIALLY OWNS A SIGNIFICANT PERCENTAGE OF OUR
COMMON STOCK.

Ownership of Circle Group is concentrated in management. Gregory J. Halpern, who
owns 29.% of the outstanding shares of our common stock, and all of the
directors and officers collectively own 35%. Holders of our common stock can be
out-voted by management in most circumstances and thereby management can control
the composition of our board of directors and our policies.

WE MAY EXPAND OUR OPERATIONS BY MAKING ACQUISITIONS WHICH COULD SUBJECT US TO A
NUMBER OF OPERATIONAL RISKS.

In order to grow our business, we may expand our operations by acquiring other
businesses in the future. We cannot predict whether or when any acquisitions
will occur. Acquisitions commonly involve certain risks, and we cannot assure
you that any acquired business will be successfully integrated into our
operations or will perform as we expect. Any future acquisitions could involve
certain other risks, including the assumption of additional liabilities,
potentially dilutive issuances of equity securities and diversion of
management's attention from other business concerns We may also enter into joint
venture transactions. Joint ventures have the added risk that the other joint
venture partners may have economic, business or legal interests or objectives
that are inconsistent with our interests and objectives.

OUR INABILITY TO SECURE AND PROTECT OUR INTELLECTUAL PROPERTY MAY RESULT IN
COSTLY AND TIME-CONSUMING LITIGATION AND COULD IMPEDE US FROM EVER ATTAINING
MARKET SUCCESS.

We hold several patents as well as copyrights and trademarks with respect to our
products and expect to continue to file applications in the future as a means of
protecting our intellectual property. In addition, we seek to protect our
proprietary information and know-how through the use of trade secrets,
confidentiality agreements and other similar security measures. With respect to
patents, there can be no assurance that any applications for patent protection
will be granted, or, if granted, will offer meaningful protection. Additionally,
there can be no assurance that competitors will not develop, patent or gain
access to similar know-how and technology, or reverse engineer our products, or
that any confidentiality agreements upon which we rely to protect our trade
secrets and other proprietary information will be adequate to protect our
proprietary technology. The occurrence of any such events could have a material
adverse effect on our results of operations and financial condition.

OUR STOCK PRICE MAY DROP UNEXPECTEDLY DUE TO SHORT SELLING OF OUR COMMON STOCK
IN THE MARKET.

     We have experienced and may continue to experience unexpected decline in
our stock price due to manipulation of the market by individuals who profit by
short selling our common stock. Short selling occurs when an individual borrows
shares from an investor through a broker and then sells those borrowed shares at
the current market price. The "short seller" profits when the stock price falls
because he or she can repurchase the stock at a lower price and pay back the
person they borrowed, thereby making a profit. We cannot assure you that short
sellers will not continue to drive the stock price down in the future, causing
decline in the value of your investment.

                                       7
<PAGE>
THE FLUCTUATION IN OUR STOCK PRICE MAY RESULT IN A DECLINE IN THE VALUE OF YOUR
INVESTMENT.

     The price of our common stock may fluctuate widely, depending upon many
factors, including the differences between our actual financial and operating
results and those expected by investors and analysts, changes in analysts'
recommendations or projections, short selling of our stock in the market,
changes in general economic or market conditions and broad market fluctuations.
Companies that experience volatility in the market price of their securities
often are subject to securities class action litigation. This type of
litigation, if instituted against us, could result in substantial costs and
divert management's attention and resources away from our business.

FORWARD-LOOKING STATEMENTS

     When used in this Form 10-QSB and in future filings by us with the
Securities and Exchange Commission, in our press releases or other public or
shareholder communications, and in oral statements made with the approval of an
authorized executive officer, the words "believes," "intends," "expects," "may,"
"will," "should," "plan," "projected," "contemplates," "anticipates," or similar
statements are intended to identify forward-looking statements. Our ability to
predict results or the actual effect of future plans or strategies are
uncertain.

     Factors which could have a material adverse effect on our operations
include, but are not limited to, market acceptance of Z-Trim, general economic
conditions, availability of additional financing on acceptable terms,
legislative/regulatory changes, competition, demand for financial services in
our market areas and accounting principles and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and
you should not place undue reliance on these forward-looking statements, which
apply only as of the date of this filing. We undertake no obligation to release
publicly the result of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date of this Form
10-QSB or to reflect the occurrence of unanticipated events. 6

                                       8
<PAGE>
ITEM 3. CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have concluded
that the Company's disclosure controls and procedures (as defined pursuant to
Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934), based on
their evaluation of such controls and procedures as of the end of the period
covered by this report, are effective to ensure that information required to be
disclosed by the Company in the reports it files under the Securities Exchange
Act of 1934, as amended, is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the Securities and Exchange
Commission and that such information is accumulated and communicated to the
Company's management, including its Chief Executive officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company's internal controls over financial
reporting identified in connection with management's evaluation that occurred
during the Company's last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                       9
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

In July 2005, an action was filed in the U. S. District for the Northern
District of Illinois, 05-C 3921, Circle Group Holdings, Inc., plaintiff, versus
Farhad Zaghi and Nurieel Akhamzadeh, defendants. The claims are for $965,000.
plus interest. attorneys' fees, costs and punitive damages and arising out of a
promissory note for the purchase of Circle Group shares of common stock. The
defendants made an initial and an interim installment payment, but defaulted
thereafter on a subsequent installment.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the third quarter of 2005, we sold an aggregate of 750,000 shares of our
common stock in private offerings generating $300,000 in gross proceeds. The
shares were issued in the third quarter of 2005. No underwriters participated in
the offerings .

Date of Transaction         No. of Shares             Consideration
       7/1/05                  750,000                   $300,000


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
      (a)  Exhibits

Exhibit No.                           Description
-----------                           -----------

 3.1(i)        Articles of Incorporation of Circle Group Holdings,
               Inc.[Incorporated by reference to Exhibit 2.1 to Circle Group's
               Registration Statement on Form 10-SB]

 3.1(ii)       Bylaws of Circle Group Holdings, Inc. [Incorporated by reference
               to Exhibit 2.2 to Circle Group's Registration Statement on Form
               10-SB]

10.1           Gregory J. Halpern Employment Agreement [Incorporated by
               reference to Exhibit 6.1 to Circle Group's Registration Statement
               on Form 10-SB]

10.2           Michael Theriault Employment Agreement [Incorporated by reference
               to Exhibit 6.3 to Circle Group's Registration Statement on Form
               10-SB]

10.3           Dana L. Dabney Employment Agreement [Incorporated by reference to
               Exhibit 6.4 to Circle Group's Registration Statement on Form
               10-SB]

10.4 (a)       Circle Group Holdings,Inc. 1999 Stock Option Plan [Incorporated
               by reference to Exhibit 6.6 to Circle Group's Registration
               Statement on Form 10-SB]

10.4 (b)       Circle Group Holdings, Inc. 2004 Equity Incentive Plan
               [Incorporated by reference to Circle Group's Proxy Statement for
               its Annual Meeting conducted on June16, 2004 and approved by its
               Shareholders on that date].

10.5           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated May 20, 1999 [Incorporated by
               reference to Exhibit 6.7 to Circle Group's Registration Statement
               on Form 10-SB]

10.6           Industrial Lease Agreement between CLO Enterprises and Circle
               Group Holdings, Inc. dated June 18, 1999 [Incorporated by
               reference to Exhibit 6.8 to Circle Group's Registration Statement
               on Form 10-SB]

10.7           Promissory Note, Dated November 30, 2002, delivered by Circle
               Group Holdings, Inc. in favor of Edward L. Halpern [Incorporated
               by reference to Exhibit 6.11 to Circle Group's\ Annual Report on
               Form 10-KSB for the year ended December 31,2002]

10.8           Asset Purchase Agreement, dated August 27, 2002, by and between
               Circle Group Holdings, Inc. and UTEK Corporation [Incorporated by
               reference to Circle Group's Current Report on Form 8-K filed on
               September 11, 2002] 8

                                       10
<PAGE>
10.9           Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and Brookhaven Science Associates dated
               March 26 2003 [Incorporated by reference to Exhibit 10.14 to
               Circle Group's Form 10-QSB for the quarter ending September 30,
               2003]

10.10          Assignment of License Agreement between UTEK Corporation, Circle
               Group Holdings, Inc. and University of Illinois dated July 9,
               2003 [Incorporated by reference to Exhibit 10.15 to Circle
               Group's Form 10-QSB for the quarter ending September 30, 2003]

10.11          Assignment of License Agreement between Circle Group Holdings,
               Inc. and Brookhaven Science Associates dated July 22, 2003
               [Incorporated by reference to Exhibit 10.16 to Circle Group's
               Form 10-QSB for the quarter ending September 30, 2003]

15.1           Letter of Spector and Wong (re unaudited interim financial
               information)

23.1           Opinion of Pepper Hamilton, legal counsel. (Incorporated by
               reference to Circle Group's Registration Statement on Form 10-SB)

23.2           Opinion of Lerman, Boudart & Associates, LLP, Accountants,
               (Incorporated by reference to Circle Group's Registration
               Statement on Form 10-SB)

31.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1*          Statement Under Oath of Principal Executive Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2*          Statement Under Oath of Principal Financial Officer of the
               Company Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

* Filed herewith

                                       11

<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES

                  Index to Financial Statements
                  -----------------------------

Consolidated Balance Sheet at
SEPTEMBER 30, 2005 (unaudited)....................................... F-1

Consolidated Statement of
  Operations as of SEPTEMBER 30 (unaudited).......................... F-2

Consolidated Statements of
  Cash Flows as of SEPTEMBER 30, 2005 (unaudited).................... F-3

Notes to Interim Unaudited
  Consolidated Financial Statements.................................. F-4


<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 2005 and 2004
<TABLE>
<CAPTION>



                           ASSETS
Current Assets                                                               2005                 2004
                                                                       ------------------   ------------------
<S>                                                                             <C>                 <C>
  Cash and cash equivalents                                                     $ 26,953            $ 602,741
  Accounts receivable, net of allowance for doubtful
    accounts of $0 and $6,096 for 2005 and 2004                                   58,216               88,792
  Prepaid expenses and other assets                                               88,269               37,323
  Inventory                                                                      101,964               62,847
                                                                       ------------------   ------------------
    Total current assets                                                         275,402              791,703
                                                                       ------------------   ------------------

Property and equipment, net                                                    6,645,280            5,867,956
                                                                       ------------------   ------------------

Other Assets
  Deposits                                                                        11,103               11,103
  Intangible assets, net                                                         537,500              571,832
                                                                       ------------------   ------------------
    Total other assets                                                           548,603              582,935
                                                                       ------------------   ------------------

      TOTAL ASSETS                                                           $ 7,469,285          $ 7,242,594
                                                                       ==================   ==================

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
  Accounts payable                                                             $ 779,302             $ 85,879
  Accrued expenses and other current liabilities                                 131,186            1,469,832
  Note payable - related party                                                         -               25,000
  Capital lease obligations                                                       33,511               28,901
                                                                       ------------------   ------------------
    Total current liabilities                                                    943,999            1,609,612
                                                                       ------------------   ------------------

Long-Term Liabilities
  Capital lease obligations                                                       19,690               53,406
                                                                       ------------------   ------------------

TOTAL LIABILITIES                                                                963,689            1,663,018
                                                                       ------------------   ------------------

Minority Deficit                                                                (151,854)             (58,711)
                                                                       ------------------   ------------------

Stockholders' Equity
  Common stock, $0.00005 par value; authorized 200,000,000 shares;
   issued and outstanding 47,847,345 shares                                        2,392                1,946
  Common stock to be issued                                                           22                   22
  Additional paid-in capital                                                  38,889,926           33,376,928
  Notes receivable for issuance of stock, net                                   (163,000)          (2,290,000)
  Unamortized expenses                                                           (62,900)                   -
  Accumulated Deficit                                                        (31,997,721)         (25,439,340)
  Treasury stock, at cost                                                        (11,269)             (11,269)
                                                                       ------------------   ------------------
TOTAL STOCKHOLDERS' EQUITY                                                     6,657,450            5,638,287
                                                                       ------------------   ------------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 7,469,285          $ 7,242,594
                                                                       ==================   ==================
</TABLE>
                                      F-1
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>


                                                       For Three Months ended              For Nine Months ended
                                                           September 30,                      September 30,
                                                         2005           2004                2005           2004
----------------------------------------------------------------------------------------------------------------------
<S>                                                      <C>            <C>                 <C>             <C>
REVENUES:
  Products                                               $ 124,567      $ 175,045           $ 401,251       $ 489,739
  Services                                                     426           (476)              3,134          30,056
----------------------------------------------------------------------------------------------------------------------
    Total revenues                                         124,993        174,569             404,385         519,795
----------------------------------------------------------------------------------------------------------------------

COST OF REVENUES:
  Products                                                 177,441        122,112             492,620         461,700
  Services                                                       -        (30,861)             23,607         105,893
----------------------------------------------------------------------------------------------------------------------
    Total cost of revenues                                 177,441         91,251             516,227         567,593
----------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES:
  Selling, general and administrative                      978,282        995,941           3,963,455       3,496,962
  Amortization of intangible assets                          8,583          8,584              25,750          25,751
----------------------------------------------------------------------------------------------------------------------
    Total operating expenses                               986,865      1,004,525           3,989,205       3,522,713
----------------------------------------------------------------------------------------------------------------------
     OPERATING LOSS                                     (1,039,313)      (921,207)         (4,101,047)     (3,570,511)
----------------------------------------------------------------------------------------------------------------------



OTHER INCOME (EXPENSES):
  Other income                                              10,500         15,507              34,030          49,452
  Interest income                                              238          1,626               4,423           6,249
  Settlement gain                                                -        951,000                   -         953,000
  Provision for loan loss                                        -              -            (965,000)              -
  Interest expense                                          (6,212)        (3,404)            (15,285)        (14,860)
----------------------------------------------------------------------------------------------------------------------
    Total other income (expenses)                            4,526        964,729            (941,832)        993,841
----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST              (1,034,787)        43,522          (5,042,879)     (2,576,670)
----------------------------------------------------------------------------------------------------------------------

Minority interest in losses of subsidiairies                29,766         13,305              72,988          47,385
----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                      $(1,005,021)      $ 56,827         $(4,969,891)   $ (2,529,285)
----------------------------------------------------------------------------------------------------------------------
Net income (loss) per Share - Basic and Diluted            $ (0.02)        $ 0.00             $ (0.11)        $ (0.07)
----------------------------------------------------------------------------------------------------------------------
Weighted Average Number of Shares                       47,591,164     38,844,872          45,895,832      36,913,063
</TABLE>

                                      F-2
<PAGE>
CIRCLE GROUP HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOW (unaudited)
<TABLE>
<CAPTION>

For Nine Months ended September 30,                                                  2005                  2004
--------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>                    <C>
Cash Flows From Operating Activities:
  Net loss                                                                       $ (4,969,891)          $(2,529,285)
  Adjustments to reconcile net loss to net cash used in operations:
   Minority deficit                                                                   (72,988)              (47,385)
   Depreciation and amortization                                                      492,049               124,986
   Issuance of common stocks and warrants for services                                482,720               379,170
   Amortization of noncash expenses                                                   774,514               445,867
   Provision for uncollectible loan loss                                              965,000                     -
   (Increase) decrease in:
     Accounts receivable                                                               28,249               (19,635)
     Inventory                                                                         13,778               (44,798)
     Prepaid expenses and other assets                                                 12,279               (21,004)
   Increase (decrease) in:
     Accounts payable and accrued expenses                                           (973,464)            1,243,934
--------------------------------------------------------------------------------------------------------------------
   Cash flows used in operating activities                                         (3,247,754)             (468,150)
--------------------------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities:
  Purchase of property and equipment                                                 (157,891)           (5,249,754)
  Proceeds from disposition of property and equipment                                       -                   650
--------------------------------------------------------------------------------------------------------------------
   Cash flows used in investing activities                                           (157,891)           (5,249,104)
--------------------------------------------------------------------------------------------------------------------
Cash Flows From Financing Activities:
  Net proceeds from sales of stock                                                    450,000             2,761,175
  Exercise of options and warrants                                                    559,567             2,193,664
  Proceeds from stock subscription receviable                                       2,350,000                     -
  Payments on capital lease obligations                                               (20,717)              (18,562)
--------------------------------------------------------------------------------------------------------------------
   Cash flows provided by financing activities                                      3,338,850             4,936,277
--------------------------------------------------------------------------------------------------------------------

     Net decrease in cash and cash equivalents                                        (66,795)             (780,977)

Cash and cash equivalents, at beginning of period                                      93,748             1,383,718
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, at end of period                                      $     26,953           $   602,741
--------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
    Interest paid                                                                $     15,389           $    14,860

Supplemental schedule of noncash investing and financing activities:
  Stock subscriptions and notes receivable incurred for issuance of stocks       $     13,000           $ 2,290,000
  Issuance of common stock for liabilities incurred for equipment purchases      $    186,582           $         -
  Issuance of credit memos for liabilities incurred for equipment purchases      $     32,865           $         -
  Issuance of common stock  to retire note payable                               $     25,000           $         -
  Shares to be retired for unamortized expenses                                  $  1,012,175           $         -

</TABLE>
                                      F-3
<PAGE>
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Circle Group Holdings,  Inc. (the "Company") is a pioneer of emerging technology
companies.  The Company  provides  small  business  infrastructure,  funding and
substantial  intellectual  capital to bring  important and timely  life-changing
technologies  to the  marketplace  through  all phases of the  commercialization
process.

The Company has  participated  in several  public and private  offerings and has
expanded its business.  In 2002, the Company reorganized its business units into
three  reportable   segments:   food  product   development,   security  product
development, and e-tailor and acquired FiberGel Technologies, Inc. ("FiberGel"),
which owns an exclusive  license to Z-Trim(TM),  an all-natural,  corn-based fat
replacement.

Circle  Group  operates  through  its  FiberGel,  Mini-Raman  Lidar  Technology,
ThraxVac  Technology,  The Brave Way Training  Systems,  Inc.,  Consulting  CGI,
On-Line Bedding Corp., and Z-Amaize Technologies, Inc. divisions.

On March 31, 2004, the Company's  common stock was approved to be trading on the
American Stock Exchange under the symbol, CXN.

A summary of significant accounting policies follows.

Presentation of Interim Information

The  financial  information  at  September  30,  2005 and for the three and nine
months  ended  September  30,  2005  and 2004 is  unaudited,  but  includes  all
adjustments  (consisting only of normal recurring  adjustments) that the Company
considers  necessary for a fair  presentation  of the financial  information set
forth herein, in accordance with accounting principles generally accepted in the
United  States ("U.S.  GAAP") for interim  financial  information,  and with the
instructions  to Form 10-QSB and Item 310 (b) of  Regulation  S-B.  Accordingly,
such information does not include all of the information and footnotes  required
by U.S. GAAP for annual financial statements. For further information,  refer to
the  consolidated  financial  statements and footnotes  thereto  included in the
Company's annual Report on Form 10-KSB for the year ended December 31, 2004.

The results for the three and nine months  ended  September  30, 2005 may not be
indicative  of  results  for the year  ending  December  31,  2005 or any future
periods.

                                      F-4
<PAGE>
Principle of Consolidation and Presentation

The  accompanying  consolidated  financial  statements  include the  accounts of
Circle  Group  Holdings  Inc.  and its  subsidiaries  after  elimination  of all
inter-company accounts and transactions. Certain prior period balances have been
reclassified to conform to the current period presentation.

NOTE 2 - GOING CONCERN

The Company's  consolidated  financial  statements have been prepared on a going
concern basis,  which  contemplates the realization of assets and the settlement
of liabilities  and  commitments  in the normal course of business.  In the near
term, the Company expects  operating costs to continue to exceed funds generated
from operations. As a result, the Company expects to continue to incur operating
losses and may not have enough  money to grow its  business  in the future.  The
Company can give no assurance that it will achieve  profitability  or be capable
of sustaining profitable operations.  As a result, operations in the near future
are expected to continue to use working capital.

To successfully grow the individual  segments of the business,  the Company must
decrease its cash burn rate,  improve its cash  position and the revenue base of
each segment,  and succeed in its ability to raise additional  capital through a
combination  of  primarily  public or  private  equity  offerings  or  strategic
alliances. The Company also depends on certain important employees, and the loss
of any of those employees may harm the Company's business.

The Company has  generated  approximately  $3,359,567  in  additional  operating
capital  during the first nine months of 2005 through  sales of its common stock
in exercising  options and  warrants,  and proceeds  from notes  receivable  for
stock.

                                                    September 30,
                                               2005              2004
                                           --------------    --------------
Raw materials                                   $ 48,300          $ 59,393
Work-in-process                                    2,278                 -
Packaging and display                             40,953                 -
Finished goods                                    10,433             3,454
                                           --------------    --------------
  Total inventory                              $ 101,964          $ 62,847
                                           ==============    ==============

NOTE 4 - PROPERTY AND EQUIPMENT

Depreciation  expense  was  $466,299  and  $99,235  for the  nine  months  ended
September 30, 2005 and 2004, respectively.

                                      F-5
<PAGE>
NOTE 5 - INTANGIBLE ASSETS

During  the  first  nine  months  of  fiscal  2005,  no  significant  identified
intangible  assets  were  acquired  and no  identified  intangible  assets  were
impaired.  The  following  table  present  details  of the  Company's  purchased
intangible assets:

                                     Gross
                                    Carrying    Accumulated
                                     Amount     Amortization       Net
--------------------------------- ------------- -------------  ------------
License Rights to
Developed technology                 $ 420,000     $ (52,500)    $ 367,500
Website                                200,000       (30,000)      170,000
                                  ------------- -------------  ------------

  Total intangible assets            $ 620,000     $ (82,500)    $ 537,500
                                  ============= =============  ============

Amortization  of  intangibles  was $25,750 and $25,751 for the nine months ended
September 30, 2005 and 2004, respectively.

Based on the carrying  amount of the  intangibles  as of September 30, 2005, and
assuming  no  impairment  of  the  underlying   assets,   the  estimated  future
amortization is as follows:

        Years ended December 31,
        -----------------------------------------------------
        2005 (October 1 to December 31)                           $ 8,584
        2006                                                       34,333
        2007                                                       34,333
        2008                                                       34,333
        2009                                                       34,333
        Thereafter                                                391,584
                                                             -------------

        Total amortization                                      $ 537,500
                                                             =============


                                      F-6
<PAGE>
NOTE 6 - STOCKHOLDERS' EQUITY

Private Placement Offering

In  June  2005,  the  Company  conducted  a  self-underwritten  offering  of the
Company's  common stock up to $1.6  million.  The stock was sold for $12,500 per
unit.  Each unit consists of 31,250 shares of common stock and 31,250  warrants.
The  warrants are  exercisable  at $1.00 per share and expire in three (3) years
after  purchase of the  above-described  unit.  As of September  30,  2005,  the
Company sold and issued 1,125,000 shares received $450,000 in proceeds under the
offering.

In March  2004,  the  Company  conducted  a  self-underwritten  offering  of the
Company's  common  stock up to $5 million.  The stock was sold for  $100,000 per
unit.  Each unit consists of 22,222 shares of common stock and 22,222  warrants.
The  warrants are  exercisable  at $6.00 per share and expire in three (3) years
after  purchase of the  above-described  unit.  As of September  30,  2004,  the
Company sold and issued  1,126,813  shares and received  $2,761,175  in proceeds
under the offering.

NOTE 6 - STOCKHOLDERS' EQUITY (CONTINUED)

Exercising of stock warrants and options

During the first nine months of 2005,  there were  1,695,811  stock warrants and
options  exercised.  The Company received total proceeds of $572,067,  of which,
$13,000 was received in October 2005.  The Company  applied  $99,151 of proceeds
due from  employees  exercising  options  during the first  nine  months of 2005
against the employees' net pay.

During the first nine months of 2004,  there were  5,001,330  stock warrants and
options exercised. The Company received $2,193,664 in cash and a note receivable
of $250,000 upon exercising.

Notes receivable for issued stock

In 2004,  Nurieel  Akhamzadeh  agreed to purchase the Company's  common stock in
form of a note  receivable of  $2,040,000,  of which the sum of  $1,075,000  was
received. The note bears zero interest and is in default.  Litigation is pending
in the U. S. District Court in 05 C 3921 against  Nurieel  Akhamzadeh and Farhad
Zaghi, who acted as an intermediary and facilitator of the transaction,  for the
collection  of  principal  balance due of  $965,000  and  default  interest  and
attorney's  fees arising as described  above and several  other causes of action
seeking  legal  remedies  in the suit.  During the second  quarter of 2005,  the
Company provided an allowance for the remaining balance.

The Company also has a note  receivable  of $250,000  for warrants  exercised in
2004.  The note  carries an interest  rate of 5% per annum and is pledged by the
stock.  Principal and interest are due on June 30, 2006. A principal  payment of
$100,000 was received in 2005.

Rescinded Stock for Services

During  December 2004, the Company  issued  2,250,000  shares of common stock in
exchange for professional services. The services were to be preformed during the
period of November 22, 2004 through  November 22, 2006. On August 24, 2005,  the
Company  rescinded the agreement due to the lack of  performance by the parties.
The stock certificates are effectively restricted by the stock clearing service.
The balance of the  unamortized  services  recorded  for the stock at August 24,
2005 of $1,012,175 was charged against additional paid-in capital.

                                      F-7
<PAGE>
NOTE 7 - NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>
                                                           Three Months ended                 Nine Months ended
                                                             September 30,                      September 30,
                                                          2005            2004               2005            2004
<S>                                                    <C>                 <C>            <C>             <C>
---------------------------------------------------- ---------------  --------------    --------------- ---------------
Numerator:
---------------------------------------------------- ---------------  --------------    --------------- ---------------
  Net income (loss)                                    $ (1,005,021)   $     56,827       $ (4,969,891)   $ (2,529,285)
---------------------------------------------------- ---------------  --------------    --------------- ---------------
Denominator:
---------------------------------------------------- ---------------  --------------    --------------- ---------------
  Weighted average number of shares outstanding          47,591,164      38,844,872         45,895,832      36,913,063
---------------------------------------------------- ---------------  --------------    --------------- ---------------
Net loss per share-basic and diluted                   $      (0.02)   $       0.00       $      (0.11)   $      (0.07)
---------------------------------------------------- ---------------  --------------    --------------- ---------------
</TABLE>
As the Company incurred net losses for the three and nine months ended September
30, 2005,  the effect of dilutive  securities  totaling  3,847,862 and 1,461,014
equivalent  shares,  respectively,  has been  excluded from the  calculation  of
diluted loss per share because their effect was anti-dilutive.

As the Company  incurred net loss for the nine months ended  September 30, 2004,
the effect of dilutive securities totaling 1,932,701  equivalent shares has been
excluded from the  calculation  of diluted loss per share because the effect was
anti-dilutive.

NOTE 8 - STOCK OPTION PLAN

The Company has a Stock  Option  Plan (the Plan)  effective  January 2, 1999 and
amended in 2004,  which  provides for the  issuance of qualified  options to all
employees and non-qualified  options to consultants and other service providers.
The  Company  accounts  for this plan  under  the  recognition  and  measurement
principles of APB Opinion No. 25, Accounting for Stock Issued to Employees,  and
related interpretations.  No stock-based employee compensation cost is reflected
in net loss, as all options  granted under this plan had an exercise price equal
to the  market  value of the  underlying  common  stock on the grant  date.  The
following table illustrates the effect on net loss and net loss per share if the
Company  had  applied  the fair value  provisions  of FASB  Statement  No.  123,
Accounting for Stock-Based Compensation, to stock-based employee compensation.
<TABLE>
<CAPTION>


                                                           Three Months ended              Nine Months ended
                                                             September 30,                   September 30,
                                                          2005            2004            2005            2004
---------------------------------------------------  ---------------- -------------- ---------------- --------------
<S>                                                     <C>               <C>           <C>            <C>
Net income (loss), as reported                          $ (1,005,021)     $  56,827     $ (4,969,891)  $ (2,529,285)

Deduct: Total stock-based employee compensation
 expense determined under the fair value of awards
 net of tax related effects                                  675,758        664,649        1,780,194      1,439,731
                                                     ---------------- -------------- ---------------- --------------

Pro forma net loss                                      $ (1,680,779)     $(607,822)    $ (6,750,085)  $ (3,969,016)
                                                     ================ ============== ================ ==============

Reported net loss per share-basic and diluted                $ (0.02)     $    0.00     $      (0.11)  $      (0.07)
                                                     ================ ============== ================ ==============

Pro forma net loss per share-basic and diluted               $ (0.04)     $   (0.02)    $      (0.15)  $      (0.11)
                                                     ================ ============== ================ ==============
</TABLE>
NOTE 9 - RELATED PARTY TRANSACTIONWS

In June 2005, a related party exercised 83,333 stock options at $0.30 per share.
The total  proceed of $25,000 was applied  against the note  payable owed to the
related party.

In June 2005, the Chief Executive Officer exercised 148,333 of his stock options
at $.30 per share, or an aggregate of $44,500.  The Company  received $20,000 in
cash and the balance of $24,500 was applied against the officer's net pay.

In February 2004,  the Chairman of the Board of Directors  exercised his 720,000
stock  options at $0.05 per share,  or an  aggregate  of  $36,000.  The  Company
received  $8,000 in cash and the balance of $28,000 was charged as payments  for
his service rendered.

                                      F-8
<PAGE>
NOTE 10 - SETTLEMENT GAIN

On July 26, 2004,  the Company  entered into an agreement in principle to settle
the lawsuit it filed against its former law firm in August 2001. Pursuant to the
terms of the  agreement,  the parties  have agreed to release  each other of all
claims in exchange  for a payment of $950,000  to the  Company.  The Company has
received the settlement in full.

NOTE 11 - WITHDRAWAL FROM REGISTRATION AS A BROKER-DEALER

On January 27, 2004, CGI Capital,  Inc. filed an application of withdrawal  from
registration as a broker or dealer. The registration withdrawal became effective
on the 60th day after the filing pursuant to the SEC regulations.

NOTE 12 - GUARANTEES

The Company  from time to time  enters  into  certain  types of  contracts  that
contingently  require  the  Company to  indemnify  parties  against  third party
claims. These contracts primarily relate to: (i) divestiture  agreements,  under
which the Company may provide  customary  indemnifications  to purchasers of the
Company's businesses or assets; (ii) certain real estate leases, under which the
Company may be required to indemnify property owners for environmental and other
liabilities,  and other claims  arising from the Company's use of the applicable
premises;  and (iii) certain agreements with the Company's  officers,  directors
and employees, under which the Company may be required to indemnify such persons
for liabilities arising out of their employment relationship.  The terms of such
obligations  vary.  Generally,  a maximum  obligation is not explicitly  stated.
Because  the  obligated  amounts  of these  types of  agreements  often  are not
explicitly  stated,  the overall  maximum  amount of the  obligations  cannot be
reasonably estimated.  Historically,  the Company has not been obligated to make
significant  payments  for  these  obligations,  and no  liabilities  have  been
recorded for these obligations on its consolidated balance sheet as of September
30, 2005.

In general,  the Company offers a one-year  warranty for most of the products it
sold. To date, the Company has not incurred any material costs  associated  with
these warranties.

NOTE 13 - PENDING LITIGATION

As disclosed in Note 6 to the financial statements,  the Company filed a lawsuit
in the U.S.  District  Court to collect the unpaid  principal  balance,  default
interest and attorney fees for a note  receivable for stock issued.  The Company
is in the discovery process and a trial date has not been set.

In March 2005 the  Company's  general  contractor  that built the  manufacturing
plant and installed the equipment  filed a mechanics  lien for unpaid  billings.
The claim of $250,000 represents the construction cost overruns in the build-out
of the facility.  The discovery process has commenced and no trial date has been
set. A liability of $142,000 has been included in accounts  payable.  Management
believed that the amount of ultimate  liability with respect to such action will
not exceed such amount. .

                                      F-9
<PAGE>
NOTE 14 - SEGMENT INFORMATION

The Company  evaluates its reporting  segments in accordance  with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related  Information.  The Chief
Executive  Officer has been identified as the Chief Operating  Decision Maker as
defined by SFAS No. 131. The Chief Executive Officer allocates resources to each
segment based on their business prospects,  competitive  factors,  net sales and
operating results.

During the third  quarter of 2005,  the  Company  changed the  structure  of its
internally  organization to include three principal operating segments: (i) Food
Product Development, (ii) Security Training and Products and (iii) E-tailer. The
food  product  development  segment  owns the  exclusive,  worldwide  license to
Z-Trim(TM).  The Security training offers cost effective  self-defense  training
courses and products with a uniquely targeted  curriculum.  The e-tailer segment
is a distributor of pillows,  blankets,  and other bedding products. The Company
no longer reports segment information in its business consulting  services.  The
Company also has other subsidiaries that do not meet the quantitative thresholds
of a reportable segment.

NOTE 14 - SEGMENT INFORMATION (Continued)

The Company reviews the operating  segments' income to evaluate  performance and
to allocate resources.  Operating  companies' income for the reportable segments
excludes income taxes, minority interest and amortization of goodwill. Provision
for income taxes is centrally  managed at the corporate level and,  accordingly,
such items are not presented by segment.  The segments'  accounting policies are
the same as those described in the summary of significant accounting policies.

Inter segment transactions are recorded at cost.

Summarized  financial  information of the Company's results by operating segment
is as follows:
<TABLE>
<CAPTION>
                                                  Three Months ended                Nine Months ended
                                             September 30,                    September 30,
                                                 2005            2004              2005           2004
---------------------------------------------------------------------------   -------------------------------
<S>                                             <C>             <C>              <C>             <C>
Net Revenue:
  Food Product Development                      $    15,870     $    2,922       $    25,833     $    51,969
  Security Training and Products                        426            239             2,705           2,268
  E-tailer                                          108,697        171,884           375,417         437,530
                                            -------------------------------   -------------------------------
Net Revenue by  Reportable Segment              $   124,993     $  175,045       $   403,955     $   491,767
All Other Operating Revenue                               -           (476)              429          28,028
---------------------------------------------------------------------------   -------------------------------
  Consolidated Net Revenue                      $   124,993     $  174,569       $   404,384     $   519,795
---------------------------------------------------------------------------   -------------------------------
Operating Income (Loss):
  Food Product Development                      $  (540,311)    $ (241,914)      $(1,325,459)    $  (861,552)
  Security Training and Products                        262            185             1,958           1,958
  E-tailer                                          (20,723)         5,278           (62,530)          1,693
                                            -------------------------------   -------------------------------
Operating Loss by  Reportable Segment           $  (560,772)    $ (236,451)      $(1,386,031)    $  (857,901)
All Other Operating Loss                           (478,541)      (684,756)       (2,715,017)     (2,712,610)
---------------------------------------------------------------------------   -------------------------------
  Consolidated Operating Loss                   $(1,039,313)    $ (921,207)      $(4,101,048)    $(3,570,511)
---------------------------------------------------------------------------   -------------------------------
Net Income (Loss) Before Minority Interest:
  Food Product Development                      $  (541,203)    $ (241,914)      $(1,327,047)    $  (861,552)
  Security Training and Products                        262            185             1,958           1,958
  E-tailer                                          (20,491)         5,158           (62,023)          1,773
                                            -------------------------------   -------------------------------
Net Loss by  Reportable Segment                 $  (561,432)    $ (236,571)      $(1,387,112)    $  (857,821)
All Other Net Loss                                 (473,355)       280,093        (3,655,767)     (1,718,849)
---------------------------------------------------------------------------   -------------------------------
Consolidated Net Income (Loss) Before Minority I$(1,034,787)    $   43,522       $(5,042,879)    $(2,576,670)
---------------------------------------------------------------------------   -------------------------------

                                           September 30,
Total Assets:                                  2005                 2004
--------------------------------------------------------------------------------
Food Product Development                       $ 6,230,123          $ 5,519,425
Security Training and Products                       1,100               11,772
E-tailer                                            81,429              149,670
                                         ---------------------------------------
                                                 6,312,652            5,680,867
All other segments                               1,156,633            1,561,727
--------------------------------------------------------------------------------
Consolidated Assets                            $ 7,469,285          $ 7,242,594
--------------------------------------------------------------------------------
</TABLE>
                                      F-10
<PAGE>

                                   SIGNATURES

     In accordance  with the  requirements  of the Exchange Act, the  Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        CIRCLE GROUP HOLDINGS, INC.
                                        (Registrant)

Date:  November 14, 2005
                                         By:  /s/ Gregory J. Halpern
                                              ----------------------------------
                                              Gregory J. Halpern, President and
                                              Chief Executive Officer

                                         By:  /s/ Dana L. Dabney
                                              ----------------------------------
                                              Dana L. Dabney, Chief Financial
                                              Officer




                                       12